Assert your rights and get it in writing

Perhaps, the tablets Moses brought down from Mt. Sinai should have contained another commandment: Get it in writing, and assert your rights. Artists who consign their work to art galleries regularly get a lesson in why they need to take this to heart. Here are two recent examples:

In June of 2014, Los Angeles artist Nicola Wood was asked by Culver City, California art dealer Bruce Lurie to allow him to bring four of her classic-car themed paintings to an annual art fair (“Art Hamptons”) in Bridgehampton, New York taking place the following month. Viewing the event as a “high-end show in a prestigious location,” offering her the “opportunity to present her work to an entirely new audience,” the artist willingly agreed and consigned to the dealer four paintings with a combined price of $160,000. There was some discussion of the prices, and both artist and dealer agreed to lower prices to a combined $82,500 in order to spur sales, and the dealer was given the flexibility to discount the works another 10 percent if that would encourage sales. However, Wood wrote on the consignment agreement that discounts of 20 percent or more would need her pre-approval. The one-page document also stated that the artist would be paid “within 30 days of completion of sale.”

That was the easy part.

Lurie next asked Wood to pay him $1,000 for a booth fee to participate in the Bridgehampton art fair. (Is your heart starting to race yet?) None of Wood’s paintings were sold at “Art Hamptons” but, instead of returning them to her, Lurie took the four artworks to another art fair, this in Aspen, Colorado. One of the paintings, titled “House with 1960 Cadillac,” which had been priced by the artist and dealer at $35,000, did sell, to Lurie’s cousin who bought the artwork as a wedding anniversary present for his wife. The exact price of this painting was not revealed to the artist – she suspects that it was under $15,000, far below her agreement with the dealer – but she received no payment anyway, perhaps in retaliation for the fact that Wood hired a lawyer when she learned that her paintings were taken to Colorado without her permission.

To make matters worse, one of the four paintings, titled “See Through,” was damaged beyond repair during transit to Aspen, requiring the dealer to make a claim on her behalf to Lloyd’s of London, which he did. (The insurance company agreed to pay Wood $4,000, with the dealer responsible for paying her the $540 deductible, for the $7,500 painting.)

Eventually, the remaining two paintings were returned to her, in good condition.

In mid-January, Nicola Wood brought a lawsuit in Superior Court in California against the gallery owner for fraud and breach of contract. According to her lawyer, John Fuchs, “the lawsuit was filed in California, because both parties are California residents, the contract was signed here” and payment to the artist was to be in Los Angeles. He noted that if “one of the parties is a California resident and one is not, it could be filed in Federal Court, based on what is known as ‘diversity of citizenship.’ The place where the painting was exhibited and where it was sold, in my opinion does not affect the place for filing the lawsuit. However, if we seek a writ of possession to require that the painting be returned, because it was sold without authorization and in violation of the consignment agreement, we may have to take that court order to Colorado to get it enforced, assuming the painting is in fact in Colorado.”

The lawyer called the one-page consignment agreement “bare bones” and “somewhat vague” – there was no stipulated period of time after which Lurie would return the paintings to Wood, no mention of the amount of dealer commission and no requirement that the artist be given an accounting (receipts or cancelled checks) after a sale – “but still enforceable.”

Nicola Wood is not alone in her troubles with those claiming to want to help artists sell their work. William T. Chambers, a portrait painter in Arlington Heights, Illinois, had created a number of images from famous movies, such as “My Fair Lady,” “Annie,” “The King and I” and “Gone with the Wind,” as well as several portraits of the late Princess Diana, that were reproduced on collectible plates produced by the Bradford Exchange, which is based in Niles, Illinois. This was a straight licensing deal that proved profitable for both parties.

The actual paintings for these collectible plates remained Chambers’ property, and in 2011 he decided to consign them for sale at Midwest Estate Buyers, an online auction house based in Northbrook, Illinois. The agreement that the artist and auctioneer signed placed minimum prices on each of the consigned artworks and set a sales commission of 35 percent.

The auction house did sell a number of his paintings, sending Chambers a series of checks that “were returned NSF [not sufficient funds] and had to be re-deposited or exchanged for cash payment.” Things got worse when the artist decided to terminate his agreement with Midwest Estate Buyers. The auctioneer at first refused to return to him the remaining artworks, later informing the artist that four paintings of scenes from the film “Annie” “had been stolen by movers when defendants moved their offices.”

According to the lawsuit that Chambers filed in Cook County Court in early January of this year, charging breach of contract and fraud, the four “Annie” paintings “had been sold in online auctions in January and February 2012 for far below the agreed minimum price under the agreement.”

It is never clear what one is supposed to learn from deals in which one side is acting in good faith and the other behaves badly. In both instances, artists who believed themselves to have been wronged, asserted their rights, hiring lawyers and bringing lawsuits. Perhaps, the only morals to draw are that artists should learn about the people to whom they are consigning their work (references from dealers and other artists, see if lawsuits have been filed against these people in the past for any reason) and only use a consignment agreement that covers a range of issues. These include:

The term of the agreement (how long will we be bound by this contractual relationship).

The nature of the relationship (exclusive or non-exclusive representation, for instance). The dealer may have the exclusive rights to sell all of the artist’s work, or exclusive rights to sell only prints (another dealer has exclusive rights to the sculpture, yet another has the rights to the canvas paintings); perhaps, the dealer has the exclusive rights to market the artist’s work in North America or just New York City. The dealer may simply handle an artist’s work without any claims to exclusivity.

An exact accounting of what is being consigned to the dealer. A paper trail should accompany every work that the dealer or gallery is sent, listing the title of the piece, the medium and size, and a signed receipt should be in the artist’s possession.

Price arrangements (minimum amounts per work or prices for each work, as well as what sorts of discounts may be allowed).

The percentage of the dealer’s commission.

The responsibilities of both dealer and artist (how promotional efforts for a show will be handled, where advertisements will be placed, who will pay for framing and insurance, whether or not the artist will be compensated for the loss in the event of damage or theft).

The frequency and nature of the exhibits (one-person exhibits, group shows, once a year or less often, when in the year, how the work will be shown).

A requirement for periodic accounting (who has purchased the works, how much was paid for them, where and when have works been loaned or sent out on approval).

Prompt payment by the dealer (sixty to ninety days should be the absolute limit, 30 days is preferable).

Other provisions that might be discussed and formalized in a letter of agreement between artist and dealer include a mechanism for resolving disputes (such as presenting a disagreement before an arbitrator), protection of the artist’s assets in the event that the gallery goes bankrupt in those states where artist-consignment laws do not exist. If the agreement requires that all attorneys’ fees be paid by the person who is in breach of the contract, this will encourage the dealer to act ethically.

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2 responses

Dear Mr. Grant, I read an article of yours titled “The Aftermath of an Auction” found it quite helpful in answering a few questions I had. I think we might have a confidential conversation about the current reality of the auction business. I’ll supply you with a few surprising facts that I’m quite sure you don’t know. I do very careful research mainly for law firms. Also have a rather good artist in the family named “Jerome Myers” who died in 1940 in New York. That has nothing to do with the subject of my e-mail except that I still feel concern over artists and consignors both. Barry